Weak dollar corrodes Anglo American's record year

Profits rose 59pc from $1.69billion the year before as higher base and ferrous metal prices offset the effects of a weak US dollar.

This failed to satisfy the market, however, which had predicted earnings as high as $2.946billion. As a result, the share price fell 32p to £13.05.

Tony Trahar, Anglo American's chief executive, said the company was very pleased with its results. He ascribed the market's reaction to general concerns about currency weakness and the prospect of Asian banks directing business away from the dollar.

Mr Trahar said that the results "reflect the transformation of our asset base into a focused global resources group over the past five years".

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Anglo American has repositioned itself since 2000 by buying more than $15billion of businesses and disposing of assets worth around $9billion.

Revenues at Anglo American, which has dual listing in London and South Africa, rose to $24.9billion in 2004 from $18.6billion the year before.

A one-time gain from the sale of the company's 20pc stake in Gold Fields helped push annual profits up 83pc to $2.9billion. Anglo American sold the stake to Norilsk Nickel in March for $1.18billion, making $464m on the sale.

Mr Trahar said the outlook for 2005 was dependent on prospects for developing countries and China, whose growing economy was one of the biggest sources of demand in 2004.

He said: "On the supply side, global output is set to increase and much will depend on the industry maintaining capital discipline in the face of higher prices."

The company is also preparing to face another year of currency losses which dented last year's profits, particularly in South Africa where the rand surged 18pc on the dollar during the year.

The company expects to make minimum cost savings of $350m for 2005 across all its business units. Anglo American beat its own 2004 cost-savings target of $250m, cutting costs by $554m.

Nick Hatch, Investec analyst, said he would review his forecasts after the results came in below expectation. He said that a wrong business mix and rand strength would maintain the broker's sell rating.